How FAAN relocation to Lagos will reduce costs

The Federal Airports Authority of Nigeria (FAAN) recently announced its intention to relocate its headquarters from Abuja to Lagos.

While the planned relocation has led to several reactions, with some supporting the government’s decision, saying it was in the interest of the sector and would eliminate unnecessary expenditures, others are opposing the move, stressing that attention should rather be channeled into infrastructure upgrade rather than relocation to Lagos.

FAAN had admitted that relocation wasn’t an overnight decision but was made after wide consultations by the new management with stakeholders, which also involved the unions.

In a statement made available to BusinessDay, it pointed out some of the reasons behind this move, stating that it is in the best interest of the authority and the country in general.

The airport regulatory agency said, “Those affected by the decision to move the headquarters to Abuja have since returned to Lagos as there is no office space for them in Abuja. It was ill-advised in the first place to move the headquarters to Abuja when there was no single FAAN building in Abuja to accommodate all of them at once.

“Having returned to Lagos, the Authority would be liable to pay them DTA (Duty Tour Allowance) because technically they are working out of station as their official posting is to Abuja. The Minister has decided to stop this waste of public resources and rip-off on the public purse.

“The other option open to the authority was abandon the old FAAN building in Lagos to rot away and to use its scarce resources to rent an office space in Abuja for millions of naira of public money when, in actual fact more than sixty percent of its activities are in Lagos, given the huge passenger volume of the Lagos airports. The stakeholders and the Minister decided against that and to save the country this waste.

“⁠The Minister has rolled out plans to get concessionaires to build befitting offices for the Authority in Lagos and Abuja and until that is done, the Authority will continue to manage its old building in Lagos that can accommodate all its Directors and senior officials for now.

“Abuja continues to have full operational offices and the Authority has not scaled down operations in Abuja one bit. It is just the technical decision of where the Authority has its ‘corporate headquarters’ that has been taken without affecting the structure of operations as they are for now in both cities.

FAAN further explained that in the near future, when befitting corporate buildings have been built for the Authority in both Lagos and Abuja, a final decision will be taken as to the location of the permanent headquarters, depending on the exigencies of the time.

Benefits

Stakeholders in the aviation sector have said if the relocation is properly carried out, it would benefit the aviation sector considering that 60 percent of aviation activities and even passenger traffic emanates from Lagos.

Seyi Adewale, the chief executive officer of Mainstream Cargo Limited, said there are significant benefits of relocating FAAN critical headquarter departments back to Lagos one of which is protecting the sanctity and wellness of the family unit.

Adewale said this is critical to the wellbeing of the society, adding that any policy geared at maintaining, retaining, and securing the wellbeing of the family unit should be prioritized and preserved.

“FAAN has a well developed staff quarters in Lagos with appropriate facilities and infrastructure to nurture a good cohesive family unit and indeed community; schools, hospitals, recreation and sport centres, proximity to office etc.

“This wellbeing has been threatened with the hurried Abuja staff transfers of a parent by the last minister of aviation and thereby did not provide adequate offices, accommodation, funds or budget to adequately manage the same,” he explained.

He also explained that the relocation of FAAN’s strategic headquarter or departments back to Lagos will reduce the high cost of accommodation and in fact living associated with the massive influx of airport staff including other aviation agencies such as NAMA, AIB, etc. around the Nnamdi Azikiwe Airport and all at the same time and period.

He disclosed that many FAAN employees had to go into debt (borrowings) to fund their Abuja transfers with a promissory note to pay back when the government pays their relocation allowances and hopefully compensations.

“I anticipate great joy amongst FAAN employees upon the execution of this relocation policy back to Lagos.

“The aviation ministry is expected to have massive savings that can free up funds to other important needs that should include improving staff welfare, training, and acquiring tools and equipment for the betterment of the sector.

“We should note that this will also impact the aviation service providers who normally pass on additional costs of their logistics and other associated costs in and out of Abuja to FAAN as they need to recoup and stay profitable. The Lagos relocation should positively impact FAAN financial outgoings by lowering contract sums and fees,” Adewale explained.

He said he believes the recent management or audit reports of FAAN would have spotlighted the huge and avoidable wastages easily from the expenses due travels, accommodation, out of station allowances etc.

“Any Employer with a private sector orientation would have easily made the same decision to rescind or discard the prior directive to move its headquarters and / or critical oversight departments back to Lagos.

“It is efficient to be based in the area or location where an entity earns most of its revenue or has the huge chunk of its operations especially when the area or locality is safe , developed and a central hub,” Adewale explained.

He reiterated that the relocation is a right and reasonable decision barring the expected political backlash by the critics of the government.

He said it is important that the government communicates properly and engage stakeholders in order to diffuse the usual suspicion within the polity based on amplified attention to ethnicity on many issues.

Sindy Foster, principal managing partner, Avaero Capital Partners said the benefits of FAAN’s decision to relocate may be difficult to know now as no one knows what was spent to relocate FAAN to Abuja in the first place.

“We also don’t know how many people will be impacted by this move. In this day and age with hybrid working they should look into technology solutions to avoid this back and forth. If this move is to have any economic benefit it needs to be one which will last and not be overturned by the next administration,” she suggested.

A FAAN staff who would not want his name mentioned commended the new administration for the decision to relocate the FAAN headquarters back to Lagos, stressing that relocating to Abuja during the former administration was very frustrating for many people, especially those with families in Lagos.

“We felt really frustrated when we were told to move to Abuja during the last administration. I had to leave my family in Lagos and spent the little money I had with me to pay for a one-room apartment in Abuja. The instruction to leave Lagos at that time was so sudden and the government didn’t make provisions to cover for cost of relocation and accomodations.

“Many of us still have our families in Lagos and the relocation back to Lagos will help us reduce our expenditure of always travelling to Lagos to see our families,” the staff said.

He also hinted that since major aviation activities take place at the Lagos airport, it would help the authority monitor closely activities in the sector and proffer sustainable solutions to challenges in the sector

Beyond relocation, experts push for infrastructure upgrade

Stakeholders in the sector have said that beyond the relocation of FAAN, there should be other deliberate efforts to eliminate waste and upgrade infrastructure in the sector.

Sindy Foster suggested that FAAN should concentrate on looking at the bigger picture of over bloating of personnel, duplication of roles and functions, wasted costs across the board, lack of maintenance, lack of proper direction and lack of optimised non-aeronautical revenue and partnership opportunities particularly with airlines.

John Ojikutu, industry expert and the CEO of Centurion Aviation Security and Safety Consult, Nigeria said beyond the relocation, the ministry should stop its interferences on the Management and the administration of the Agency.

“While in Lagos, the MD and the Directors were making incessant and very unnecessary trips to the ministry in Abuja. It did not stop for the period the Headquarter was in Abuja and will not stop on its return to Lagos or to anywhere.

” What can stop the economic wastes is the establishment of the Management Board. The solution is to ensure that the Management Boards are established to curb the excessive interferences of the Minister on the agencies management wherever the FAAN Headquarters and other aviation agencies are located.

“Alternatively to stop these messes, is to ensure that the airports concessions go on as planned for the federal airports for non aeronautical services like the passengers cargo terminal buildings, car parks, tollgates, etc,” Ojikutu said.

Olumide Ohunayo industry analyst and Director, Research, Zenith Travels said the relocation issue needs to be managed properly to avoid issues.

“The new management wanting to relocate must have some plans in place. They must look at the cost of moving in the first place. Relocation must be justified looking at the cost component. We need to look at other things as well such as provision of infrastructure, certification of airports and proper structuring of FAAN,” Ohunayo said.